Short answer
The answer, before the reasoning
UK SRS S1 is not generally mandatory merely because the government published the final standard. It is currently available for voluntary use by any entity.
Existing FCA and company-law climate-reporting duties continue to apply to their own in-scope entities, but they are not a general requirement to prepare a complete UK SRS S1 report. The FCA has consulted on new listed-company rules that would use UK SRS S1 and S2 for accounting periods beginning on or after 1 January 2027. Under the proposals, wider non-climate S1 reporting would be on a comply-or-explain basis for specified listing categories. The government is separately considering a possible Companies Act route for economically significant non-listed entities through the Modernising Corporate Reporting programme. Neither future route should be presented as final law as at 3 August 2026. UK SRS S1 regulatory route decision tree · London Reporting Academy educational visual
In practice
Keep four questions separate
| Question | Current answer at 3 August 2026 |
|---|---|
| Can an entity use UK SRS S1 voluntarily? | Yes. The final standard is available for voluntary use by any entity. |
| Must every UK company prepare a UK SRS S1 report? | No. Publication of the standard did not create a general reporting obligation. |
| Do sustainability or climate duties already exist? | Yes. Current FCA TCFD-aligned rules, Companies Act and LLP climate rules, and sector requirements apply to specified entities. |
| Could UK SRS S1 become mandatory in future? | Yes, through final FCA listing rules, future Companies Act legislation or another competent UK regulatory route. The details are still under development. |
Current status: a voluntary standard
The Department for Business and Trade published final UK SRS S1 and UK SRS S2 on 25 February 2026. The government's guidance states that both standards are available for voluntary use by any entity that chooses to apply them.
Voluntary use can serve several purposes:
preparing for possible FCA or Companies Act requirements;
meeting investor, lender, customer or parent-group expectations;
creating a consistent investor-focused reporting basis across sustainability topics;
connecting existing climate, risk, strategy and financial reporting;
developing controls and evidence before assurance expectations increase; and
supporting a dual UK SRS and IFRS Sustainability Disclosure Standards assessment.
The reporting basis must be clear. An entity might:
1. prepare disclosures that fully comply with UK SRS S1 and make the explicit and unreserved statement required by paragraph 72;
2. apply only selected S1 concepts without making a compliance claim;
3. use the climate-only provision in paragraph E3 and disclose that fact, without asserting UK SRS S1 compliance; or
4. use S1 as a readiness benchmark for a future regulatory route.
These are not interchangeable positions. The claim, reliefs and applicable legal route should be approved before drafting begins.
Existing FCA TCFD-aligned rules remain in force
The FCA currently requires specified listed companies to make TCFD-aligned climate-related disclosures or explain relevant non-disclosure under the applicable UK Listing Rules. These are current rules, not proposals.
The existing listed-company framework matters for S1 readiness because it has already established governance, strategy, risk-management and metrics-and-targets reporting for climate. However, current TCFD-aligned rules do not automatically require a complete investor-focused assessment of all non-climate sustainability-related risks and opportunities under UK SRS S1.
An in-scope listed issuer should therefore run two workstreams until the regulatory transition is final:
continue to satisfy the current FCA rule for the applicable accounting period; and
prepare a controlled TCFD-to-UK-SRS gap assessment covering S1 foundations, S2 climate detail, non-climate risks and opportunities, financial effects, industry information, controls and claims.
The issuer should not stop current TCFD reporting because final UK SRS has been published or because the FCA consultation has closed.
Existing Companies Act and LLP climate duties
The 2022 company and LLP regulations require climate-related financial disclosures from specified large UK entities. The detailed scope includes categories such as certain traded, banking and insurance entities, AIM companies with more than 500 employees, and other large companies or LLPs meeting the relevant employee and turnover tests.
These duties are separate from a complete UK SRS S1 mandate. They focus on climate-related financial disclosure and have their own statutory scope, content and report-location requirements. A company may choose to use UK SRS S2, together with the relevant S1 foundations, to support its climate reporting, but it must still test the Companies Act or LLP requirements independently.
For a legal applicability decision, use the legislation and current government guidance rather than a summary threshold alone. Group exemptions, parent reporting, entity category, employee counts, turnover and report location can change the result.
What FCA CP26/5 proposes
FCA Consultation Paper CP26/5 proposes replacing current listed-company TCFD-aligned rules with UK SRS-based requirements. The consultation closed on 20 March 2026. The FCA intends to publish a Policy Statement in autumn 2026, with rules intended to come into force from 1 January 2027 and to apply to accounting periods beginning on or after that date.
Proposed treatment by listing category
The final Handbook may change the scope, compliance basis, transition reliefs, location or explanations. Planning should use the consultation as a scenario, not as enacted requirements.
In practice
| Listing category | Proposed UK SRS treatment |
|---|---|
| Commercial companies, non-equity shares and non-voting equity shares, and transition categories | Mandatory UK SRS S2 climate reporting except Scope 3; Scope 3 on comply or explain; UK SRS S1 non-climate reporting on comply or explain. |
| Secondary listing and depositary receipts categories | A more flexible transparency approach regarding standards or requirements applied in the primary listing jurisdiction or place of incorporation, voluntary standards and assurance, rather than the main UK SRS reporting rule. |
| Closed-ended funds, open-ended investment companies, shell companies, debt and debt-like securities, securitised derivatives, warrants, options and miscellaneous securities | Outside the main CP26/5 UK SRS proposal. |
What comply or explain would mean for non-climate S1
Under the consultation, in-scope issuers in the main categories would either report the material non-climate sustainability-related information required by UK SRS S1 or explain their approach where they do not comply.
This is not the same as saying that every S1 datapoint is optional. The proposal would create a regulatory obligation to provide the disclosure or the explanation specified by the final rule. The explanation would need to be clear about the elements not complied with and the reasons.
The standard-level compliance statement remains a separate test. CP26/5 recognises that an issuer choosing to explain rather than comply may be unable to state that its disclosures comply with UK SRS. Regulatory compliance with a comply-or-explain rule should therefore not be described automatically as complete compliance with UK SRS S1.
Proposed transitional relief for wider S1 reporting
CP26/5 proposed that listed companies with accounting periods beginning on or after 1 January 2027 could use the UK SRS S1 climate-only provision as a two-year deferral of non-climate reporting. In the proposed timetable:
Final UK SRS S1 itself does not specify a fixed duration for paragraph E3. Paragraph E5 and paragraph 73B make availability subject to Companies Act, FCA or other competent UK rules when application is mandatory. The two-year limit is therefore an FCA proposal, not a general feature that every voluntary reporter must use.
In practice
| Accounting period begins | Proposed S1 position for the main in-scope categories |
|---|---|
| Before 1 January 2027 | Continue current TCFD-aligned rules, or voluntarily move to the proposed UK SRS rule without access to the proposed regulatory relief. |
| 1 January 2027 to 31 December 2027 | New UK SRS rules proposed to apply; first year of possible non-climate S1 relief. |
| 1 January 2028 to 31 December 2028 | Second year of possible non-climate S1 relief. |
| On or after 1 January 2029 | Proposed S1 non-climate relief expired; comply-or-explain S1 reporting would operate without that transition deferral. |
Future Companies Act route
The government response to the UK SRS consultation places future company-law decisions within the Modernising Corporate Reporting programme. The programme is expected to consider whether economically significant non-listed entities should report against UK SRS and how the annual report and existing non-financial reporting requirements might be simplified.
As at 3 August 2026:
no general Companies Act requirement to report against UK SRS S1 has been enacted;
the term economically significant has not been fixed for a final UK SRS reporting regime;
no final scope threshold, commencement date, transition period, assurance requirement or report location has been set; and
current climate-related company and LLP duties remain relevant unless and until legislation changes them.
A future Companies Act route may differ materially from the FCA route. It could use different thresholds, exemptions, phased requirements, claims and assurance arrangements. Private companies should not assume that CP26/5 will simply be copied into company law.
Step 1 - Is the entity currently subject to a reporting rule?
Check the FCA Handbook, Companies Act and LLP regulations, sector rules, pension requirements and contractual obligations. Continue to comply with the current rule for the relevant accounting period.
Step 2 - Is the entity in a listing category covered by CP26/5?
If yes, use the proposed 2027 timetable for readiness planning, but place the FCA Policy Statement and final legal instrument as a formal update trigger.
Step 3 - Is the entity a large non-listed company or LLP?
Check current company-law climate scope. Monitor the Modernising Corporate Reporting programme separately; do not assume a complete S1 mandate exists.
Step 4 - Is the entity choosing voluntary UK SRS use?
Define the reason, reporting period, location, materiality process, S2 interaction, relief use and intended claim. Voluntary application can start before regulation, but it must still follow the standard's requirements if a compliance claim is made.
Step 5 - Is a UK SRS compliance statement planned?
Test every applicable requirement. A regulatory explanation, selective alignment statement or use of the S1 climate-only provision does not support an explicit UK SRS S1 compliance claim.
In practice
Illustrative entity pathways
| Entity | Current position | Sensible next step |
|---|---|---|
| UK commercial listed company | Current FCA TCFD-aligned rule; may also be within company-law climate scope. | Maintain current compliance, map CP26/5 proposals and build non-climate S1 readiness. |
| AIM company with more than 500 employees | May be within current company-law climate requirements; not automatically within the main FCA UKLR proposal. | Confirm statutory scope and use S1/S2 voluntarily where useful; monitor Companies Act reform. |
| Large private UK group | May be within current company-law climate rules but no general S1 mandate. | Conduct a proportionate S1 gap assessment and monitor MCR scope proposals. |
| UK subsidiary of an overseas parent | UK SRS may be voluntary locally while group reporting follows IFRS S1/S2 or another jurisdictional standard. | Map group data to UK legal requirements and avoid assuming the parent claim covers the UK entity. |
| Small unlisted company outside current thresholds | No general UK SRS duty solely because the standards exist. | Use selected S1 concepts only where investor, lender, customer or strategic value justifies the cost. |
In practice
Common status mistakes
| Mistake | Why it is wrong | Correction |
|---|---|---|
| “The government issued UK SRS, so all large companies must use it.” | Issuance for voluntary use did not create a general mandate. | Identify the separate legal or regulatory instrument that applies. |
| “FCA rules start in 2027.” | The FCA has proposed that timing; the Policy Statement and final Handbook text are pending. | Label every 2027 item as proposed until finalised. |
| “Current TCFD duties have ended because TCFD disbanded.” | Existing FCA and company-law rules remain legally relevant until amended. | Continue the current rule and plan the transition. |
| “Comply or explain means S1 is optional.” | The final rule could require either disclosure or a prescribed explanation. | Design an evidence-based explanation process as well as data collection. |
| “Using the climate-only provision gives S1 compliance.” | Paragraph 73A prohibits the UK SRS S1 claim when E3 is used. | Disclose the provision and distinguish any S2 claim. |
| “The future Companies Act route will match CP26/5.” | Government scope and legislation are separate policy decisions. | Maintain separate regulatory workstreams and update triggers. |
Update triggers to monitor
FCA Policy Statement and final UKLR legal instrument.
Confirmation or change of the proposed 1 January 2027 commencement.
Final rules on non-climate S1 comply-or-explain reporting and explanations.
Final treatment of the S1 climate-only relief and comparatives.
Modernising Corporate Reporting consultation and any Companies Act legislation.
Changes to current TCFD-aligned FCA or company-law climate rules.
Any UK SRS amendment, official implementation guidance or regulator statement on compliance claims.
Future assurance registration or mandatory assurance requirements.
Board-level readiness questions
Which current legal and regulatory duties apply to the entity and group?
Which CP26/5 listing category, if any, would apply under the proposal?
Is the project voluntary, mandatory-readiness work or intended to support a compliance claim?
What non-climate risks and opportunities are likely to be material to primary users?
What data, finance and control gaps would prevent reporting from 2027?
Does the annual-report timetable support same-time sustainability and financial reporting?
Which decisions must be revisited after the FCA Policy Statement or MCR consultation?
Sources
Primary sources
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